The Emissions Trading Scheme and Forestry - December 2011

Pre-1990 Forestry Allocation

PF Olsen successfully completed all its pre-1990 allocation applications by the 30 November deadline with four hours to spare! Peter Clark expressed disappointment that perhaps another application could have been squeezed in! (In jest of course). This has been an intensive programme and it took us over 12 months to complete all the applications - well done to all those involved.

Post-1989 ETS Registration Deadline

If you want to claim your post-1989 NZUs for 2008 to 2011 by 31st March 2012, you need to get your forest registered before then. This deadline is for a voluntary emissions return. The final opportunity to claim your NZUs for 2008 to 2012 will require registration by the 31 December 2012. We are currently working on a number of post-1989 registration applications and still have capacity to do more. If you require assistance to register, email colin.hercus@pfolsen.com.

Carbon Price

Over the last month NZUs fell from around NZ$13 to $9.50 and are currently trading at $10. The financial crisis in Europe continues to negatively impact on the carbon market along with concern over the structure of international carbon markets post 2012. The latest round of climate change negotiations in Durban will have done nothing to strengthen the outlook for carbon markets in the short-term with agreements to cutback on emissions not binding until 2020.

The NZ Government is reviewing the option of banning industrial gas CERs in the NZ ETS to partially align the scheme with European Union. These 'grey' CERs make up about two thirds of the overall supply of CERs. It is the price of CERs which has caused the NZU price to dramatically fall as they can be used in the NZ ETS without limit. The hope is that this proposed banning of 'grey' CERs will strengthen the NZU price in NZ, but some market commentators are picking that it will make little difference and are calling for the government to place greater restrictions on the use of CERs by NZ emitters as is the case in the EU (see also Clarky's Comment).